Byrnes v. National Insurance

Curia, per Sutherland, J. The general rule is unques.tionable, that, in the adjustment of a claim made by the insured upon the underwriters, for repairs put upon a vessel, the underwriters are entitled to a deduction of one third-, [274] from the expenses of the repairs ;(d) or, in other words, that they are bound to pay but two thirds of the expense. This deduction of one third new for old, as it is termed, is allowed upon the supposition that the vessel, after being re- , paired, is in better condition than she was at the commencemenj. 0f the voyage, in consequence of new materials having been substituted for old. And, as the contract of the underwriters is one of indemnity merely, it is equitable that a deduction should be made, in their favour, from the cost of the repairs, equal to the enhanced condition of the vessel. To avoid the inconvenience and embarrassment of an inquiry, in each particular case, into the difference in value between the present and former condition of the vessel, it has been established, as a general rule, that this difference shall "be estimated at one third of the cost of the repairs. In the English Courts, if the injury is sustained, and the ^epairs are made when the vessel is new, that is, in her first voyage, no deduction is allowed to the underwriters ; because, the vessel being new, it is not to be supposed that she is put in better condition by the repairs. But, in this Court, that distinction has not been adopted ; and the deduction is made alike, whether the vessel is new or old,(e) This being the general principle, the Question is presented in this case, whether the value of the old materials, whatever it may be, is to be deducted from the gross amount of repairs, and the deduction of one third new for old made, from the balance ; or, whether the one third is to be deducted from the gross amount, and the old materials to belong to the underwriters. For instance : suppose the gross amount of repairs to be 400 dollars—the old materials to be worth 100 dollars. The assured contend that the amount is to be thus stated: [275] Repairs, Deduct value of old materials,, O O O O UTICA, August, 1823. Balance, 300 Byrens V. National Insurance Company. Deduct one third new for old, 100 To be paid by underwriters, $200 " 400—100= 300—100= The underwriters, on the contrary, contend, that the true 200. principle of settlement is as follows: Repairs, $400 Deduct one third new for old, 133,33 400—133,33 Deduct, also, old materials applied to repairs, =266,67— 266,67 100=166,-100,00 671 $166,67 This question has never arisen, that I can find, either iñ the English Courts or our own; and, although cases will not frequently occur, in which the old materials will be of sufficient value to induce a discussion of it, some rule upon the subject ought to be established. It seems to me to resolve itself into the enquiry, to whom do the old materials belong ? If they belong to the assured, there is an end of the question ; for having been applied by them to the payment of the repairs, pro tanto, the assurer cannot possibly claim any further benefit from them. If there is any thing in the nature of an abandonment of them to the underwriters, then the principle contended for by the defendant may be well founded. But there is nothing like an abandonment. The assured do not, and could not claim, from the underwriters, the gross amount of the repairs. They can only claim the, difference between that amount and the value of the old materials ; for to that extent, only, are they injured: and an indemnity is all that they can claim. It is more analogous to the adjusting of a partial loss,(f) in which case the title to the goods remains in the assured. [276] The true rule, therefore, seems to me to be this—to apply the old materials towards payment for the new, and to allow the deduction of the one third neto for old, upon the balance. This rule is simple, and capable of universal application. It affords full indemnity to the assured, and gives to the underwriters all the benefit that the principle, upon which the practice of deducting one third new for old has been established, wfill justify. The plaintiffs are, therefore, entitled to judgment, for $279,26, with interest from the 3d day of' .June, 1821, as stated in the case. Judgment for the plaintiffs accordingly., Footnotes [(d)] 4) Stevens on Average, 159. Da Costa, v. Newnham, (2 T.R. 407.) Smith v. Bell and others, (2 Caines’ Cas. Err. 153.) Dunham & Bool v. The Commercial Insurance Company, (11 John. 315.) [(e)] 11 John. 315. [(f)] Vid. Lawrence v. The New-York Insurance Company, (3 John. Cas. 217.) Lewis v. Rucker, (2 Burr. 1170.) Johnson v. Sheddon, (2 East, 581.)